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Tue 16 Apr 2024 05:26GMT

Markets Avoid Risk as Coronavirus Uncertainties Hit Global Sentiment Again

Published: 28 Jan at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany,

Pound Sterling (GBP)

The Pound touched on new highs today, even as investors headed towards safer assets. Unlike other major risk-correlated currencies, the Pound continues to benefit from coronavirus vaccine hopes as Britain’s vaccine programmes are further along than those of other major economies.

Still, the Pound’s gains have been broadly volatile. If evidence of Britain’s economy struggling from the coronavirus pandemic worsens, uncertainty may outweigh vaccine hopes and finally drag the Pound lower.

Euro (EUR)

The Euro continues to be driven by movement in rival currencies. As the Pound and US Dollar have been stronger today, the Euro has been weakening. Euro investors are also anxious about the EU’s difficulties in securing coronavirus vaccinations.

Rival movement will remain the focus for Euro movement. However, key German growth rate data due tomorrow could also influence the direction of Euro trade if it surprises investors.

US Dollar (USD)

Rising coronavirus infection rates and worsening lockdown fears across the globe pushed investors to avoid taking risks today. As a result, the safe haven US Dollar was one of the more appealing major currencies. Yesterday’s Federal Reserve news had little impact on the US Dollar outlook.

Tomorrow will round out the week with US PCE inflation data, home sales and consumer confidence stats from Michigan University. However, unless this data is highly surprising the focus is likely to remain on safe haven demand.

Australian Dollar (AUD)

The Australian Dollar has tumbled for much of the past session, as investors sold risk-correlated currencies in favour of safer assets. Markets showed signs of calming towards the end of the day, so the ‘Aussie’ recovered from lows.

Australian PPI data us due to be published tomorrow. However, the data is unlikely to be too influential, but AUD could recover if markets calm from the recent risk-off movement.

New Zealand Dollar (NZD)

New Zealand’s domestic outlook keeps the New Zealand Dollar more appealing than other risk-correlated currencies this week, but risk-off movement has still caused losses today.

New Zealand confidence data from ANZ and Roy Morgan will be published during Friday’s Asian session. If the data impresses it could further boost the already strong New Zealand outlook.

Canadian Dollar (CAD)

Despite better than expected Canadian data, the Canadian Dollar continued to fall against major rivals like the US Dollar and Pound today. Coronavirus pandemic fears weighed on oil prices which further dampened CAD demand.

The week’s most influential Canadian data will be published tomorrow. Strong Canadian growth rate figures could make it easier for the Canadian Dollar to regain some of this week’s losses.
As of Thursday, 28th January 2021, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1324, GBP USD exchange rate was 1.3724, GBP AUD exchange rate was 1.7894, GBP NZD exchange rate was 1.9132, and GBP CAD exchange rate was 1.7609.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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